Many investors assume their financial advisor makes recommendations based on their best interests. Unfortunately, that’s not always the case. Many advisors are only required to recommend what is suitable, not what is best.

According to a survey conducted by the Certified Financial Planner Board in 2015, 76 percent of Americans “strongly agreed that when they receive investment advice from a financial advisor, the person providing the advice should put the consumers’ interests ahead of theirs and should have to tell consumers up front about any conflicts of interest that could potentially influence that advice.”

At the request of President Donald Trump, the U.S. Department of Labor recently enacted a 60-day delay on the fiduciary rule — a law requiring retirement financial advisors to put the interests of investors above their own profits and commissions — that was supposed to be effective April 10.

[See: 8 Things Not to Hide From Your Investment Professional.]

Unlike some other financial professionals, a registered investment advisor, a type of business, firm or individual, is already held to a fiduciary standard — meaning they must always place their clients’ best interests ahead of their own, disclose any potential conflicts of interests and maximize an investor’s welfare rather than their compensation.

“Most investors have no idea the difference between an RIA and an advisor at a bank or broker-dealer,” says John Nowicki president of LCM Capital Management in Chicago.

Registered investment advisors must be registered with the SEC if they are larger, or with the state securities authorities if they are smaller, and legally required to put investors’ interests before their own. An individual who works in this capacity is a called an investment advisor representative, or IAR. The concept is based on a law created by the Investment Advisors Act of 1940 after the stock market crash caused the Great Depression.

“Having a transparent business model, like RIAs have, is important to people,” says Jake Norton, co-founder of Stewardship Financial in Gilbert, Arizona. “Often times in the broker model, high fees are hidden. The new fiduciary rule is attempting to make brokers that give advice on retirement accounts to be held to a fiduciary standard.”

The lines between who is a broker-dealer or registered representative and RIAs have gotten entangled since a broker can also be registered as an investment advisor representative. This means an investor can be sitting with a financial advisor who has the ability to be both a salesperson and a fiduciary advisor, Norton says.

“The advisor must disclose to the client when he is giving recommendations that fall under the suitability standard and when he is giving advice under the fiduciary standard,” Norton says. “Because I started my career as a broker, I can tell you that this type of disclosure is not happening.”

Know the differences. There’s a significant difference between how RIAs make their money versus those who work on commissions.

“If your agent or rep is earning commission, they are paid to move money without regard to how the investment turns out,” says Jeremy Torgerson, CEO of nVest Advisors in Brighton, Colorado, who previously worked as a hybrid advisor who was commission-based and fee-only before becoming a RIA in 2015. “If you buy a stock, I make money. If you later sell it, I make money and how it performed is irrelevant.”

If you aren’t sure if your financial advisor is an RIA, ask them to provide a copy of their Form ADV, a form investment advisors must fill out to register their license with the SEC or at the state level, Nowicki says.

“Most investors are financially illiterate and our industry preys upon them,” Nowicki says. “This is an easy first step to validate if they are fiduciary.”

Investors can also search the U.S. government’s Investment Adviser Public Disclosure website for information, which will also search FINRA’s BrokerCheck system and indicate whether an entity is only an RIA or also brokerage firm.

[See: 10 Questions to Ask Before You Hire a Financial Advisor.]

Fees for service versus commissions. “While brokers and agents may offer limited advice to investors, they are compensated by sales commissions and allowed to charge a fee in lieu of specific commissions but that makes them fee-based salespersons, not fee-only advisors,” says Warren Ward, founder of WWA Planning & Investments in Columbus, Indiana.

Many RIAs are fee-only, which means they don’t take commissions and earn a percentage of the assets under management regardless of how many transactions an investor does rather than earning sales commission.

Because RIAs don’t usually earn anything when they buy or sell a security, they typically use much less expensive investments that don’t have these charges built into them, Torgerson says. This allows RIAs to trade more frequently for changing market conditions, because it isn’t costing investors on each transaction.

Keep in mind, a portion of the RIA firms are hybrid firms that have some or all of their principals and employees who are “registered representatives” who work for broker-dealers that handle a portion of their business on a commission basis, says Corey Kupfer, founder and principal of Kupfer & Associates in New York.

Typical ranges for fees. Although there isn’t an industry standard, annual fees are usually based upon a percentage of assets under management and range from 0.50 to 1.50 percent, says Greg Heller, founder and CEO of HCR Wealth Advisors in Los Angeles.

“Investors should compare different RIA service offerings from one to another, which can affect the fees being charged,” says Charles Bean, CEO and founder of Heritage Financial Services in Westwood, Massachusetts.

“RIA’s service offerings and depth of practice can greatly vary from one firm to the next,” Bean says. “One size does not fit all.”

For example, if an investor is only looking for asset management and investment advice, the fee percentage would be lower than if the same services were being offered with detailed financial planning, Bean says.

It’s important for investors to ask how much the total fees will cost and not just what the advisor will charge, Nowicki says.

While account minimums can vary depending on the RIA, many have been geared toward high-net-worth individuals who have at least $250,000 to $500,000 in investable assets, several experts say.

But not all accounts are structured that way.

Ward says his company typically charges $280 per hour or a maximum of 1 percent of the value of assets, with an average fee about 0.08 percent.

[See: 9 Psychological Biases That Hurt Investors.]

“We have no minimum net-worth requirement,” Ward says. “We charge most people an hourly fee, so they must be willing to spend a few hundred dollars. If they truly can’t afford to pay, we don’t charge. There’s no pro-bono requirement in our licensing but we regularly do see people on that basis.”

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What is a Registered Investment Advisor? originally appeared on usnews.com